Correlation Between Nasdaq 100 and Sparta Capital

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Sparta Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nasdaq 100 and Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Sparta Capital, you can compare the effects of market volatilities on Nasdaq 100 and Sparta Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nasdaq 100 with a short position of Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Sparta Capital.

Diversification Opportunities for Nasdaq 100 and Sparta Capital

0.0

Correlation Coefficient

Nasdaq 100  Sparta Capital

Pay attention - limited upside

The 3 months correlation between Nasdaq and Sparta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and Nasdaq 100 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nasdaq 100 2x Strategy are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Sparta Capital go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Sparta Capital

If you would invest  51,676  in Nasdaq 100 2x Strategy on August 15, 2024 and sell it today you would earn a total of  7,375  from holding Nasdaq 100 2x Strategy or generate 14.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nasdaq 100 2x Strategy  vs.  Sparta Capital

Nasdaq 100 2x

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Nasdaq 100 showed solid returns over the last few months and may actually be approaching a breakup point.

Sparta Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sparta Capital is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nasdaq 100 and Sparta Capital

The main advantage of trading using opposite Nasdaq 100 and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Sparta Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sparta Capital will offset losses from the drop in Sparta Capital's long position.

The idea behind Nasdaq 100 2x Strategy and Sparta Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.